A new measure of progress

What is progress, and how do we measure it?

For many years, the standard measure of economic progress has been the Gross Domestic Product, or GDP. We’ve been told that as long as GDP is rising, we’re doing great as a society. But there are a lot of problems with GDP. It focuses on the present, not future impacts like what happens if we fill in all of our wetlands or pollute the skies. And it focuses narrowly on economic output and consumption, as if the more we consume the better off we are.

So a new generation of ecological economists has been developing alternative measures of social well-being. One is the Genuine Progress Indicator, or GPI, which combines performance on 26 variables — economic, social and environmental — to give a more well-rounded view of our quality of life (see below). All of these variables are converted to dollars, so you can add them together.

For the first time, two researchers, Rumi Shammin from Oberlin College and Ken Bagstad from the University of Vermont, have crunched the GPI data for Northeast Ohio. During the years 1990-2005, the GPI of the seven-county region declined 1%, even though those were relatively good years for economic growth. The GPI of the City of Cleveland declined 7% during that time. (See GPI per capita results below.)

The GreenCityBlueLake Institute plans to work with Shammin and Bagstad, along with Oberlin students, to maintain this set of data in the future. We hope it can be a useful way to track the region’s progress — and promote development that is sustainable.

For a detailed description of the study, see this presentation.

Source:
Bagstad, K.J. and M.R. Shammin. The Genuine Progress Indicator as a measure of regional economic welfare: A case study for Northeast Ohio. Manuscript in preparation for Ecological Economics.

More on alternative economic indicators: Redefining Progress